Bharati Walmart today announced the introduction of private labels as it commissioned its 18{+t}{+h} wholesale store Best Price in the country at Hyderabad.
“This is the third store in Andhra Pradesh. We plan to add at least five more in the country during the year and 10 more next year,” Raj Jain, President, Walmart India, and Managing Director, Bharti Walmart, said.
The venture has so far invested $21 million (about Rs 120 crore) in Andhra Pradesh for three stores. It is looking at two more stores. It takes about Rs 40 crore to set up such a store.
The store is spread over 53,000 sq ft. From day one, it will have about 60,000 members. It will mainly cater to mom-and-pop stores, office and institutions and Horeca (hotels, restaurants and caterers) segment. The three private label brands cover Right Buy, Members Mark and Bakers & Chef, offering about 400 items. “We assure a saving of 15 to 20 per cent over similar brands. It is possible to offer such pricing as we source them directly,” Raj Jain said.
The Government announcement on FDI in retail is barely nine days old. About eight States, including Andhra Pradesh, have agreed to support this. “We are still in the process of studying its implications. It will take at least 12 to 18 months to come out with the retail format,” he explained.
The company is focusing on investing in the back-end interface with farmers. This will be a win-win situation for the farmers as they will get good prices and stores will have access to best farm produce. However, there is need to invest significantly in supply chain.
According to the new guidelines, it is necessary that new investment comes through FIPB route. Therefore, we will have to make a formal application, he said.
But the challenge for retailers will be to find good sites to set up stores. The real estate costs are ruling high, requiring high investments.